Monday, October 23, 2017

Why we won't fix health care

The American health care system is insanely complicated. It is dysfunctional and corrupt in many ways. But there is one simple reason that it is so much more expensive than the systems of similarly well-off countries, and that is that we lack a mechanism for controlling spending.

By and large U.S. health insurance companies pay for the interventions that doctors prescribe, and U.S. doctors prescribe pretty much everything that can be justified. This is partly because most doctors work on a fee for service basis: the more diagnostic tests and interventions they order, the better their take-home pay. But it is also partly because this is what patients demand. When we are broken we want our physicians to pull out all the stops in an effort to make us well again.

This is easy to sympathize with. Health is a big deal. The problem is that today- compared to even 50 years ago- doctors can do a heck of a lot. They will be able to do even more tomorrow. That is the main reason why our health care premiums have been rising and why they will continue to rise without a dramatic change in the way that health care is administered.

In a sense it is odd to call this a problem. We do not complain much about the fact that the money we spend on home entertainment and dining out has gone through the roof during the last 50 years. There is nothing wrong with paying a larger portion of our budget for X if what we want (or need) is more X. That’s how things are supposed to work.

The real problem, then, is that, unlike Super Mario and Banh Mi sandwiches, most of the new stuff that medicine offers to suffering patients isn’t that great. (Of course, some, like artificial joints and cataract surgery are miraculous.) When someone has a chronic or life-threatening condition that resists standard treatment options, ordering every possible test, trying every possible medication, procedure or surgery tends to produce roughly the same result as doing nothing. (Sometimes, in fact, far worse.) This is simply because there is a world of difference between a possible outcome and a probable one.

At bottom, every country that has dealt effectively with this problem has found a way to tell very sick or broken people that certain medical interventions aren’t worth the money. Americans are not comfortable with this. Faced with the specter of socialized medicine, conservatives convulse at the prospect of death panels. Faced with market-based approaches that would encourage individuals to shop for the best value, liberals bellow about the moral necessity of equal access to the highest quality of care.

The political histrionics belie a fundamental agreement, viz., that we all want a health care system in which everyone, no matter how ill, how old, or how effective the available options, gets the full monty. Of course, we do not have anything like such a system, but the fact that we aspire to it is one of the main reasons it is killing us. And I don’t mean this figuratively. As health care consumes an ever-increasing percentage of personal, corporate and public budgets, the money available to do other things that save lives and promote well-being (education, infrastructure, public safety) dwindles proportionally. And the more we insist on an absolute right to treatments of little or no value, the less we are able to promote preventive practices of proven value.

What makes this problem particularly acute is that we, like every other industrialized country, have an aging population. People in developed countries are living longer and reproducing at ever decreasing rates. Hence, every year that goes by, the percentage of old people rises. Old people break constantly, and thus require medical attention and hospitalization far more often. This means that escalating health care costs are in large part due to our commitment to (a) keeping a growing percentage of old people alive as long as possible, committing us to (b) the use of expensive and ineffective means for doing so and, consequently, (c) spending a huge portion of the health care budget (e.g., about 25% of Medicare) on costs incurred during the year that people die.

What’s weird about this (and here I speculate irresponsibly) is that it's not obviously what most old people even want. Of course, most of us don’t want to die, but, given that we have no choice in the matter, I think we would prefer an end in which we accept death gracefully, feel sincere gratitude for the time we were given, and go gentle into that good night. (Bite me, Dylan Thomas.)

My feeling is that it is mostly the young who make this so very difficult. It is so hard to lose the people we love, and it hurts us to see once vital parents and grandparents just giving up the ghost. So, we insist that they fight and that the rest of the world fight for them, grasping at any straw the medical establishment has to offer. In this sense we are dealing with a problem of cooperation. It is easy for me to see how we are wasting money on useless interventions for old people. Just not the ones I care about.

I wish we had a system that would allow those close to death to transfer the money that would otherwise be spent attempting to prolong their own lives to the welfare of others who could really benefit from it. Childcare for a struggling single parent, or a home in a safer neighborhood, or an educational fund. That way people who are ready to pass on could make their deaths more meaningful and their acceptance of it as an occasion for sincere admiration rather than culpable capitulation. It would allow those of us who suspect we could have lived better to do something truly loving and helpful during our final days.

9 comments:

Not to distract from the elderly argument, but I wonder what your thoughts are on a real free market healthcare system? Like, shopping for healthcare needs, such as vaccines or regular check ups, much like we do for our weekly grocery shopping...checking ads and weekly specials. Hell, even clipping feeakin coupons. Do you think that competition in the market place would help to make a better system? Something with less corruption and more choice for the consumer...

Hi Kris, I'm inclined to think that the best market-based system would still make things like vaccines and pre and post natal care "free" in the sense that you don't have an out of pocket experience when you get them. It's just too much in the public interest to have everyone vaccinated, baby health well-monitored, etc. But I think there is more to be said for a system in which the standard insurance package involves a relatively high deductible, so that market mechanisms can kick in at the level of minor incidental illness and injury. Health insurance doesn't cover elective surgeries like Lasik and cosmetic plastic surgery, and that's why the price of these things has dropped dramatically.

One problem with this basic approach, of course, is that there is still a very large percentage of people with chronic health problems who will have to pay the entire deductible every year, and if the deductible is large enough to cause meaningful shopping behavior, that will crush people of lesser means. So we will inevitably end up with a system much more complicated than market purists would prefer.

I agree with pretty much all of this, Randy. Before the hurricanes hit the post I was planning to write was going to be something like, Why Obamacare hasn't/won't fix healthcare. The idea was basically this:

"Most healthcare economists identify five major problems with the US system. 1. Spending is inefficiently high [yours]; 2. Barriers to the profession (AMA) and innovation (FDA), and other supply-side issues; 3. It's impossible for anyone to know the price of anything; 4. Most people get health insurance from their employers; and 5. Access: the individual market is broken/non-existent. Obamacare aims almost exclusively at the last one. It does a decent job there, but all but ignores the others. More, it probably makes those others worse."

Could you please elaborate on #3 a bit? I could see this claim in a kind of Mises/Hayek-ian light as a claim about government involvement in the economic calculation problem, or I could see this as a seemingly more innocuous claim about the (un)pragmatics of the structure of the system - aka 'its just a really complicated market to operate in'.

Next time you're visiting your doctor and he or she proposes some treatment ask, "And what will that cost?" Watch for the look of confusion and perplexity.

Health care is unlike everything else we buy in that when we purchase a medical treatment, surgery or diagnostic test, we buy without knowing the cost. When we get the bill, we have no idea what the charges are based on and have no way to evaluate them or compare them with other providers. This leads to all manner of overspending and inefficiency.

"At bottom, every country that has dealt effectively with this problem has found a way to tell very sick or broken people that certain medical interventions aren’t worth the money. "

That's very interesting. I don't know if we have talked about this but one project I am working on has to do with decision making of patients who were diagnosed with symptoms that raise their probability of getting cancer would often opt for drastic measures just to lower this probability to some degree.

My partner's model shows that often it is more rational (in the technical sense) to just wait and see if it actually will turn into cancer, because they don't always actually do. Also, often something else will kill them before even if it does turn into cancer. So the result is that usually patients would go through unnecessary treatments that were invasive and expensive(chemo, surgery).

So part of the problem seems to be that we don't do well with uncertainty, especially when health has to do with it. This applies not just patients too - some doctors are also very allergic to probabilistic thinking and some are just convinced that patients don't care.

Lok, thanks for that. I think this is right. A lot of the reduction in mortality that have been claimed for modern cancer treatments can be almost entirely explained by early detection. And by this I don't mean, treatments that are more effective because of early detection, but the simple fact that we are now detecting more cancers that do not end up becoming life threatening. So the mortality reduction occurs even in the absence of treatment. There's a guy named Gilbert Welch who writes a lot on this sort of thing. Of course, your partners research is dead on with respect to something like prostate cancer. People who go around evangelizing early prostate cancer detection are really doing tremendous harm because the vast majority of those that are detected don't end up hurting people and there is tremendous uncertainty about what to do about them when they are detected.

Sorry to be coming late to this interesting discussion. Pascal Emmanuel Gobry makes a point similar to the last one in Randy's essay:http://www.nationalreview.com/article/453330/fear-death-makes-end-life-health-care-more-expensive.

I love Gobry's thesis that politics is downstream from culture, but culture is downstream from metaphysics.